Bill Amendment: FL S0836 | 2013 | Regular Session
NOTE: For additional amemendments please see the Bill Drafting List
Bill Title: Insurer Solvency
Status: 2013-05-03 - Died in Messages [S0836 Detail]
Download: Florida-2013-S0836-Banking_and_Insurance_Committee_Amendment_Delete_All_355782.html
Bill Title: Insurer Solvency
Status: 2013-05-03 - Died in Messages [S0836 Detail]
Download: Florida-2013-S0836-Banking_and_Insurance_Committee_Amendment_Delete_All_355782.html
Florida Senate - 2013 COMMITTEE AMENDMENT
Bill No. SB 836
Barcode 355782
LEGISLATIVE ACTION
Senate . House
Comm: RCS .
04/02/2013 .
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The Committee on Banking and Insurance (Simmons) recommended the
following:
1 Senate Amendment (with title amendment)
2
3 Delete everything after the enacting clause
4 and insert:
5 Section 1. Section 624.085, Florida Statutes, is created to
6 read:
7 624.085 Other definitions.—As used in the Florida Insurance
8 Code, the term:
9 (1) “Affiliate” means any entity that exercises control
10 over or is controlled by the insurer, directly or indirectly,
11 through:
12 (a) Equity ownership of voting securities;
13 (b) Common managerial control; or
14 (c) Collusive participation by the management of the
15 insurer and affiliate in the management of the insurer or the
16 affiliate.
17 (2) “Affiliated person” of another person means:
18 (a) The spouse of such other person;
19 (b) The parents of such other person and their lineal
20 descendants, or the parents of such other person’s spouse and
21 their lineal descendants;
22 (c) Any person who directly or indirectly owns or controls,
23 or holds with the power to vote, 10 percent or more of the
24 outstanding voting securities of such other person;
25 (d) Any person 10 percent or more of whose outstanding
26 voting securities are directly or indirectly owned or
27 controlled, or held with power to vote, by such other person;
28 (e) Any person or group of persons who directly or
29 indirectly control, are controlled by, or are under common
30 control with such other person;
31 (f) Any officer, director, partner, copartner, or employee
32 of such other person;
33 (g) If such other person is an investment company, any
34 investment adviser of such company, or any member of an advisory
35 board of such company;
36 (h) If such other person is an unincorporated investment
37 company not having a board of directors, the depositor of such
38 company; or
39 (i) Any person who has entered into an agreement, written
40 or unwritten, to act in concert with such other person in
41 acquiring or limiting the disposition of securities of a
42 domestic stock insurer or controlling company.
43 (3) “Control,” including the terms “controlling,”
44 “controlled by,” and “under common control with,” means the
45 possession, direct or indirect, of the power to direct or cause
46 the direction of the management and policies of a person,
47 whether through the ownership of voting securities, by contract
48 other than a commercial contract for goods or nonmanagement
49 services, or otherwise. Control is presumed to exist if any
50 person, directly or indirectly, owns, controls, holds with the
51 power to vote, or holds proxies representing 10 percent or more
52 of the voting securities of any other person.
53 Section 2. Paragraph (g) of subsection (1), paragraph (a)
54 of subsection (3), and paragraph (b) of subsection (6) of
55 section 624.4085, Florida Statutes, are amended to read:
56 624.4085 Risk-based capital requirements for insurers.—
57 (1) As used in this section, the term:
58 (g) “Life and health insurer” means any insurer authorized
59 or eligible under the Florida Insurance Code to underwrite life
60 or health insurance. The term includes a property and casualty
61 insurer that writes accident and health insurance only; a health
62 maintenance organization that is authorized in this state and
63 one or more other states, jurisdictions, or countries; and a
64 prepaid health service organization that is authorized in this
65 state and one or more other states, jurisdictions, or countries.
66 (3)(a) A company action level event includes:
67 1. The filing of a risk-based capital report by an insurer
68 which indicates that:
69 a. The insurer’s total adjusted capital is greater than or
70 equal to its regulatory action level risk-based capital but less
71 than its company action level risk-based capital; or
72 b. If a life and health insurer that reports using the life
73 and health annual statement instructions, the insurer has total
74 adjusted capital that is greater than or equal to its company
75 action level risk-based capital, but is less than the product of
76 its authorized control level risk-based capital and 3.0 2.5, and
77 has a negative trend;
78 c. If a life and health or property and casualty insurer
79 that reports using the health annual statement instructions, the
80 insurer or organization has total adjusted capital that is
81 greater than or equal to its company action level risk-based
82 capital, but is less than the product of its authorized control
83 level risk-based capital and 3.0, and triggers the trend test
84 determined in accordance with the trend test calculation
85 included in the Risk-Based Capital Forecasting and Instructions,
86 Health, updated annually by the National Association of
87 Insurance Commissioners; or
88 d. If a property and casualty insurer that reports using
89 the property and casualty annual statement instructions, the
90 insurer has total adjusted capital that is greater than or equal
91 to its company action level risk-based capital, but is less than
92 the product of its authorized control level risk-based capital
93 and 3.0, and triggers the trend test determined in accordance
94 with the trend test calculation included in the Risk-Based
95 Capital Forecasting and Instructions, Property/Casualty, updated
96 annually by the National Association of Insurance Commissioners;
97 2. The notification by the office to the insurer of an
98 adjusted risk-based capital report that indicates an event in
99 subparagraph 1., unless the insurer challenges the adjusted
100 risk-based capital report under subsection (7); or
101 3. If, under subsection (7), an insurer challenges an
102 adjusted risk-based capital report that indicates an event in
103 subparagraph 1., the notification by the office to the insurer
104 that the office has, after a hearing, rejected the insurer’s
105 challenge.
106 (6)
107 (b) If a mandatory control level event occurs:
108 1. With respect to a life and health insurer, the office
109 shall, after due consideration of s. 624.408, take any action
110 necessary to place the insurer under regulatory control,
111 including any remedy available under chapter 631. A mandatory
112 control level event is sufficient ground for the department to
113 be appointed as receiver as provided in chapter 631. The office
114 may forego taking action for up to 90 days after the mandatory
115 control level event if the office finds there is a reasonable
116 expectation that the mandatory control level event may be
117 eliminated within the 90-day period.
118 2. With respect to a property and casualty insurer, the
119 office shall, after due consideration of s. 624.408, s. 641.225
120 for a health maintenance organization, or s. 636.045 for a
121 prepaid limited health service organization, take any action
122 necessary to place the insurer under regulatory control,
123 including any remedy available under chapter 631, or, in the
124 case of an insurer that is not writing new business, may allow
125 the insurer to continue to operate under the supervision of the
126 office. In either case, the mandatory control level event is
127 sufficient ground for the department to be appointed as receiver
128 as provided in chapter 631. The office may forego taking action
129 for up to 90 days after the mandatory control level event if the
130 office finds there is a reasonable expectation that the
131 mandatory control level event may will be eliminated within the
132 90-day period.
133 Section 3. Subsection (1) and paragraph (e) of subsection
134 (8) of section 624.424, Florida Statutes, are amended to read:
135 624.424 Annual statement and other information.—
136 (1)(a) Each authorized insurer shall file with the office
137 full and true statements of its financial condition,
138 transactions, and affairs. An annual statement covering the
139 preceding calendar year shall be filed on or before March 1, and
140 quarterly statements covering the periods ending on March 31,
141 June 30, and September 30 shall be filed within 45 days after
142 each such date. The office may, for good cause, grant an
143 extension of time for filing of an annual or quarterly
144 statement. The statements must shall contain information
145 generally included in insurers’ financial statements prepared in
146 accordance with generally accepted insurance accounting
147 principles and practices and in a form generally used utilized
148 by insurers for financial statements, sworn to by at least two
149 executive officers of the insurer or, if a reciprocal insurer,
150 by the oath of the attorney in fact or its like officer if a
151 corporation. To facilitate uniformity in financial statements
152 and to facilitate office analysis, the commission may by rule
153 adopt the form for financial statements approved by the National
154 Association of Insurance Commissioners in 2002, and may adopt
155 subsequent amendments thereto if the methodology remains
156 substantially consistent, and may by rule require each insurer
157 to submit to the office, or such organization as the office may
158 designate, all or part of the information contained in the
159 financial statement in a computer-readable form compatible with
160 the electronic data processing system specified by the office.
161 (b) Each insurer’s annual statement must contain:
162 1. A statement of opinion on loss and loss adjustment
163 expense reserves made by a member of the American Academy of
164 Actuaries or by a qualified loss reserve specialist, pursuant to
165 under criteria established by rule of the commission. In
166 adopting the rule, the commission shall must consider any
167 criteria established by the National Association of Insurance
168 Commissioners. The office may require semiannual updates of the
169 annual statement of opinion for as to a particular insurer if
170 the office has reasonable cause to believe that such reserves
171 are understated to the extent of materially misstating the
172 financial position of the insurer. Workpapers in support of the
173 statement of opinion must be provided to the office upon
174 request. This paragraph does not apply to life insurance, health
175 insurance, or title insurance.
176 2. An actuarial opinion summary written by the insurer’s
177 appointed actuary. The summary must be filed in accordance with
178 the appropriate National Association of Insurance Commissioners
179 property and casualty annual statement instructions. Proprietary
180 business information contained in the summary is confidential
181 and exempt under s. 624.4212, and the summary and related
182 information are not subject to subpoena or discovery or
183 admissible in evidence in any private civil action. Neither the
184 office nor any person who received documents, materials, or any
185 other information while acting under the authority of the office
186 or with whom such information is shared pursuant to s. 624.4212
187 may testify in a private civil action concerning such
188 confidential information. A waiver of any other applicable claim
189 of confidentiality or privilege may not occur as a result of a
190 disclosure to the office under this section or any other section
191 of the insurance code. This paragraph does not apply to life and
192 health insurers subject to s. 625.121(3).
193 (c) The commission may by rule require reports or filings
194 required under the insurance code to be submitted by electronic
195 means in a computer-readable form compatible with the electronic
196 data processing equipment specified by the commission.
197 (8)
198 (e) The commission shall adopt rules to administer
199 implement this subsection, which rules must be in substantial
200 conformity with the 2006 Annual Financial Reporting Model
201 Regulation 1998 Model Rule requiring annual audited financial
202 reports adopted by the National Association of Insurance
203 Commissioners or subsequent amendments, except where
204 inconsistent with the requirements of this subsection. Any
205 exception to, waiver of, or interpretation of accounting
206 requirements of the commission must be in writing and signed by
207 an authorized representative of the office. An No insurer may
208 not raise as a defense in any action, any exception to, waiver
209 of, or interpretation of accounting requirements as a defense in
210 an action, unless previously issued in writing by an authorized
211 representative of the office.
212 Section 4. Paragraphs (a) and (b) of subsection (3) of
213 section 625.121, Florida Statutes, are amended to read:
214 625.121 Standard Valuation Law; life insurance.—
215 (3) ACTUARIAL OPINION OF RESERVES.—
216 (a)1. Each life insurance company doing business in this
217 state shall annually submit the opinion of a qualified actuary
218 as to whether the reserves and related actuarial items held in
219 support of the policies and contracts specified by the
220 commission by rule are computed appropriately, are based on
221 assumptions that which satisfy contractual provisions, are
222 consistent with prior reported amounts, and comply with
223 applicable laws of this state. The commission by rule shall
224 define the specifics of this opinion and add any other items
225 determined to be necessary to its scope.
226 1.2. The opinion shall be submitted with the annual
227 statement reflecting the valuation of such reserve liabilities
228 for each year ending on or after December 31, 1992.
229 2.3. The opinion applies shall apply to all business in
230 force, including individual and group health insurance plans, in
231 the form and substance acceptable to the office as specified by
232 rule of the commission.
233 3.4. The commission may adopt rules providing the standards
234 of the actuarial opinion consistent with standards adopted by
235 the Actuarial Standards Board on December 31, 2002, and
236 subsequent revisions thereto, if provided that the standards
237 remain substantially consistent.
238 4.5. In the case of an opinion required to be submitted by
239 a foreign or alien company, The office may accept an the opinion
240 filed by a foreign or alien that company with the insurance
241 supervisory official of another state if the office determines
242 that the opinion reasonably meets the requirements applicable to
243 a company domiciled in this state.
244 5.6. As used in For the purposes of this subsection, the
245 term “qualified actuary” means a member in good standing of the
246 American Academy of Actuaries who also meets the requirements
247 specified by rule of the commission.
248 6.7. Disciplinary action by the office against the company
249 or the qualified actuary shall be in accordance with the
250 insurance code and related rules adopted by the commission.
251 7.8. A memorandum in the form and substance specified by
252 rule shall be prepared to support each actuarial opinion.
253 8.9. If the insurance company fails to provide a supporting
254 memorandum at the request of the office within a period
255 specified by rule of the commission, or if the office determines
256 that the supporting memorandum provided by the insurance company
257 fails to meet the standards prescribed by rule of the
258 commission, the office may engage a qualified actuary at the
259 expense of the company to review the opinion and the basis for
260 the opinion and prepare such supporting memorandum as is
261 required by the office.
262 9.10. Except as otherwise provided in this paragraph, any
263 memorandum or other material in support of the opinion is
264 confidential and exempt from the provisions of s. 119.07(1) and
265 is not subject to subpoena or discovery or admissible in
266 evidence in any private civil action; however, the memorandum or
267 other material may be released by the office with the written
268 consent of the company, or to the American Academy of Actuaries
269 upon request stating that the memorandum or other material is
270 required for the purpose of professional disciplinary
271 proceedings and setting forth procedures satisfactory to the
272 office for preserving the confidentiality of the memorandum or
273 other material. If any portion of the confidential memorandum is
274 cited by the company in its marketing, or is cited before any
275 governmental agency other than a state insurance department, or
276 is released by the company to the news media, no portion of the
277 memorandum is confidential. Neither the office nor any person
278 who received documents, materials, or any other information
279 while acting under the authority of the office or with whom such
280 information is shared pursuant to this paragraph may testify in
281 any private civil action concerning the confidential documents,
282 materials, or information. A waiver of any applicable privilege
283 or claim of confidentiality in the documents, materials, or
284 information may not occur as a result of disclosure to the
285 office under this section or any other section of the insurance
286 code, or as a result of sharing as authorized under s. 624.4212.
287 (b) In addition to the opinion required by paragraph (a)
288 subparagraph (a)1., the office may, pursuant to commission rule,
289 require an opinion of the same qualified actuary as to whether
290 the reserves and related actuarial items held in support of the
291 policies and contracts specified by the commission by rule, when
292 considered in light of the assets held by the company with
293 respect to the reserves and related actuarial items, including,
294 but not limited to, the investment earnings on the assets and
295 considerations anticipated to be received and retained under the
296 policies and contracts, make adequate provision for the
297 company’s obligations under the policies and contracts,
298 including, but not limited to, the benefits under, and expenses
299 associated with, the policies and contracts.
300 Section 5. Subsections (1), (3), (10), (12), and (13) of
301 section 628.461, Florida Statutes, are amended to read:
302 628.461 Acquisition of controlling stock.—
303 (1) A person may not, individually or in conjunction with
304 any affiliated person of such person, acquire directly or
305 indirectly, conclude a tender offer or exchange offer for, enter
306 into any agreement to exchange securities for, or otherwise
307 finally acquire 10 5 percent or more of the outstanding voting
308 securities of a domestic stock insurer or of a controlling
309 company, unless:
310 (a) The person or affiliated person has filed with the
311 office and sent to the insurer and controlling company a letter
312 of notification regarding the transaction or proposed
313 transaction within no later than 5 days after any form of tender
314 offer or exchange offer is proposed, or within no later than 5
315 days after the acquisition of the securities if no tender offer
316 or exchange offer is involved. The notification must be provided
317 on forms prescribed by the commission containing information
318 determined necessary to understand the transaction and identify
319 all purchasers and owners involved;
320 (b) The person or affiliated person has filed with the
321 office the a statement as specified in subsection (3). The
322 statement must be completed and filed within 30 days after:
323 1. Any definitive acquisition agreement is entered;
324 2. Any form of tender offer or exchange offer is proposed;
325 or
326 3. The acquisition of the securities, if no definitive
327 acquisition agreement, tender offer, or exchange offer is
328 involved; and
329 (c) The office has approved the tender or exchange offer,
330 or acquisition if no tender offer or exchange offer is involved,
331 and approval is in effect.
332
333 In lieu of a filing as required under this subsection, a
334 party acquiring less than 10 percent of the outstanding voting
335 securities of an insurer may file a disclaimer of affiliation
336 and control. The disclaimer shall fully disclose all material
337 relationships and basis for affiliation between the person and
338 the insurer as well as the basis for disclaiming the affiliation
339 and control. After a disclaimer has been filed, the insurer
340 shall be relieved of any duty to register or report under this
341 section which may arise out of the insurer’s relationship with
342 the person unless and until the office disallows the disclaimer.
343 The office shall disallow a disclaimer only after furnishing all
344 parties in interest with notice and opportunity to be heard and
345 after making specific findings of fact to support the
346 disallowance. A filing as required under this subsection must be
347 made for as to any acquisition that equals or exceeds 10 percent
348 of the outstanding voting securities.
349 (3) The statement to be filed with the office under
350 subsection (1) and furnished to the insurer and controlling
351 company must shall contain all the following information and any
352 additional information that as the office deems necessary to
353 determine the character, experience, ability, and other
354 qualifications of the person or affiliated person of such person
355 for the protection of the policyholders and shareholders of the
356 insurer and the public:
357 (a) The identity of, and the background information
358 specified in subsection (4) on, each natural person by whom, or
359 on whose behalf, the acquisition is to be made; and, if the
360 acquisition is to be made by, or on behalf of, a corporation,
361 association, or trust, as to the corporation, association, or
362 trust and as to any person who controls, either directly or
363 indirectly, the corporation, association, or trust, the identity
364 of, and the background information specified in subsection (4)
365 on, each director, officer, trustee, or other natural person
366 performing duties similar to those of a director, officer, or
367 trustee for the corporation, association, or trust.;
368 (b) The source and amount of the funds or other
369 consideration used, or to be used, in making the acquisition.;
370 (c) Any plans or proposals that which such persons may have
371 made to liquidate such insurer, to sell any of its assets or
372 merge or consolidate it with any person, or to make any other
373 major change in its business or corporate structure or
374 management; and any plans or proposals that which such persons
375 may have made to liquidate any controlling company of such
376 insurer, to sell any of its assets or merge or consolidate it
377 with any person, or to make any other major change in its
378 business or corporate structure or management.;
379 (d) The number of shares or other securities that which the
380 person or affiliated person of such person proposes to acquire,
381 the terms of the proposed acquisition, and the manner in which
382 the securities are to be acquired.; and
383 (e) Information as to any contract, arrangement, or
384 understanding with any party with respect to any of the
385 securities of the insurer or controlling company, including, but
386 not limited to, information relating to the transfer of any of
387 the securities, option arrangements, puts or calls, or the
388 giving or withholding of proxies, which information names the
389 party with whom the contract, arrangement, or understanding has
390 been entered into and gives the details thereof.
391 (f) An agreement by the person required to file the
392 statement that the person will provide the annual report
393 specified in s. 628.801(2) if control exists.
394 (g) An acknowledgement by the person required to file the
395 statement that the person and all subsidiaries within the
396 person’s control in the insurance holding company system will
397 provide, as necessary, information to the office upon request to
398 evaluate enterprise risk to the insurer.
399 (10) Upon notification to the office by the domestic stock
400 insurer or a controlling company that any person or any
401 affiliated person of such person has acquired 10 5 percent or
402 more of the outstanding voting securities of the domestic stock
403 insurer or controlling company without complying with the
404 provisions of this section, the office shall order that the
405 person and any affiliated person of such person cease
406 acquisition of any further securities of the domestic stock
407 insurer or controlling company; however, the person or any
408 affiliated person of such person may request a proceeding, which
409 proceeding shall be convened within 7 days after the rendering
410 of the order for the sole purpose of determining whether the
411 person, individually or in connection with any affiliated person
412 of such person, has acquired 10 5 percent or more of the
413 outstanding voting securities of a domestic stock insurer or
414 controlling company. Upon the failure of the person or
415 affiliated person to request a hearing within 7 days, or upon a
416 determination at a hearing convened pursuant to this subsection
417 that the person or affiliated person has acquired voting
418 securities of a domestic stock insurer or controlling company in
419 violation of this section, the office may order the person and
420 affiliated person to divest themselves of any voting securities
421 so acquired.
422 (12)(a) A presumption of control may be rebutted by filing
423 a disclaimer of control. Any person may file a disclaimer of
424 control with the office. The disclaimer must fully disclose all
425 material relationships and bases for affiliation between the
426 person and the insurer as well as the basis for disclaiming the
427 affiliation. After a disclaimer has been filed, the insurer is
428 relieved of any duty to register or report under this section
429 that may arise out of the insurer’s relationship with the person
430 unless the office disallows the disclaimer.
431 (b) Any controlling person of a domestic insurer who seeks
432 to divest the person’s controlling interest in the domestic
433 insurer in any manner shall file with the office, with a copy to
434 the insurer, confidential notice, not subject to public
435 inspection as provided under s. 624.4212, of the person’s
436 proposed divestiture at least 30 days before the cessation of
437 control. The office shall determine those instances in which the
438 party seeking to divest or to acquire a controlling interest in
439 an insurer must file for and obtain approval of the transaction.
440 The information remains confidential until the conclusion of the
441 transaction unless the office, in its discretion, determines
442 that confidential treatment interferes with enforcement of this
443 section. If the statement referred to in subsection (1) is
444 otherwise filed, this paragraph does not apply. For the purpose
445 of this section, the term “affiliated person” of another person
446 means:
447 1. The spouse of such other person;
448 2. The parents of such other person and their lineal
449 descendants and the parents of such other person’s spouse and
450 their lineal descendants;
451 3. Any person who directly or indirectly owns or controls,
452 or holds with power to vote, 5 percent or more of the
453 outstanding voting securities of such other person;
454 4. Any person 5 percent or more of the outstanding voting
455 securities of which are directly or indirectly owned or
456 controlled, or held with power to vote, by such other person;
457 5. Any person or group of persons who directly or
458 indirectly control, are controlled by, or are under common
459 control with such other person;
460 6. Any officer, director, partner, copartner, or employee
461 of such other person;
462 7. If such other person is an investment company, any
463 investment adviser of such company or any member of an advisory
464 board of such company;
465 8. If such other person is an unincorporated investment
466 company not having a board of directors, the depositor of such
467 company; or
468 9. Any person who has entered into an agreement, written or
469 unwritten, to act in concert with such other person in acquiring
470 or limiting the disposition of securities of a domestic stock
471 insurer or controlling company.
472 (c)(b) For the purposes of this section, the term
473 “controlling company” means any corporation, trust, or
474 association owning, directly or indirectly, 25 percent or more
475 of the voting securities of one or more domestic stock insurance
476 companies.
477 (13) The commission may adopt, amend, or repeal rules that
478 are necessary to administer implement the provisions of this
479 section, pursuant to chapter 120.
480 Section 6. Section 628.801, Florida Statutes, is amended to
481 read:
482 628.801 Insurance holding companies; registration;
483 regulation.—
484 (1) An Every insurer that is authorized to do business in
485 this state and that is a member of an insurance holding company
486 shall, on or before April 1 of each year, register with the
487 office and file a registration statement and be subject to
488 regulation with respect to its relationship to the holding
489 company as provided by law or rule or statute. The commission
490 shall adopt rules establishing the information and statement
491 form required for registration and the manner in which
492 registered insurers and their affiliates are regulated. The
493 rules apply to domestic insurers, foreign insurers, and
494 commercially domiciled insurers, except for a foreign insurer
495 domiciled in states that were are accredited by the National
496 Association of Insurance Commissioners by December 31, 1995.
497 Except to the extent of any conflict with this code, the rules
498 must include all requirements and standards of ss. 4 and 5 of
499 the Insurance Holding Company System Regulatory Act and the
500 Insurance Holding Company System Model Regulation of the
501 National Association of Insurance Commissioners, as adopted on
502 December 2010. The commission may adopt subsequent amendments
503 thereto if the methodology remains substantially consistent. The
504 rules Regulatory Act and the Model Regulation existed on
505 November 30, 2001, and may include a prohibition on oral
506 contracts between affiliated entities. Material transactions
507 between an insurer and its affiliates shall be filed with the
508 office as provided by rule Upon request, the office may waive
509 filing requirements under this section for a domestic insurer
510 that is the subsidiary of an insurer that is in full compliance
511 with the insurance holding company registration laws of its
512 state of domicile, which state is accredited by the National
513 Association of Insurance Commissioners.
514 (2) The ultimate controlling person of every insurer
515 subject to registration must also file an annual enterprise risk
516 report on or before April 1. As used in this subsection, the
517 term “ultimate controlling person” means a person who is not
518 controlled by any other person. The report, to the best of the
519 ultimate controlling person’s knowledge and belief, must
520 identify the material risks within the insurance holding company
521 system that could pose enterprise risk to the insurer. The
522 report shall be filed with the lead state office of the
523 insurance holding company system as determined by the procedures
524 within the Financial Analysis Handbook adopted by the National
525 Association of Insurance Commissioners and is confidential and
526 exempt from public disclosure as provided in s. 624.4212.
527 (a) An insurer may satisfy this requirement by providing
528 the office with the most recently filed parent corporation
529 reports that have been filed with the Securities and Exchange
530 Commission which provide the appropriate enterprise risk
531 information.
532 (b) The term “enterprise risk” means any activity,
533 circumstance, event, or series of events involving one or more
534 affiliates of an insurer which, if not remedied promptly, is
535 likely to have a materially adverse effect upon the financial
536 condition or liquidity of the insurer or its insurance holding
537 company system as a whole, including anything that would cause
538 the insurer’s risk-based capital to fall into company action
539 level as set forth in s. 624.4085 or would cause the insurer to
540 be in hazardous financial condition.
541 (3) Pursuant to chapter 624 relating to the examination of
542 insurers, the office may examine any insurer registered under
543 this section and its affiliates to ascertain the financial
544 condition of the insurer, including the enterprise risk to the
545 insurer by the ultimate controlling party, or by any entity or
546 combination of entities within the insurance holding company
547 system, or by the insurance holding company system on a
548 consolidated basis.
549 (4) The filings and related documents filed pursuant to
550 this section are confidential and exempt as provided in s.
551 624.4212 and are not subject to subpoena or discovery, or
552 admissible in evidence in any private civil action. A waiver of
553 any applicable privilege or claim of confidentiality in the
554 filings and related documents may not occur as a result of any
555 disclosure to the office under this section or any other section
556 of the insurance code as authorized under s. 624.4212. Neither
557 the office nor any person who received the filings and related
558 documents while acting under the authority of the office or with
559 whom such information is shared pursuant to s. 624.4212 is
560 permitted or required to testify in any private civil action
561 concerning any confidential documents, materials, or information
562 subject to s. 624.4212.
563 (5) The failure to file a registration statement, or a
564 summary of the registration statement, or the enterprise risk
565 filing report required by this section within the time specified
566 for filing is a violation of this section.
567 (6) Upon request, the office may waive the filing
568 requirements of this section:
569 (a) If the insurer is a domestic insurer that is the
570 subsidiary of an insurer that is in full compliance with the
571 insurance holding company registration laws of its state of
572 domicile, which state is accredited by the National Association
573 of Insurance Commissioners; or
574 (b) If the insurer is a domestic insurer that writes only
575 in this state and has annual direct written and assumed premium
576 of less than $300 million, excluding premiums reinsured with the
577 Federal Crop Insurance Corporation and Federal Flood Program,
578 and demonstrates that compliance with this section would not
579 provide substantial regulatory or consumer benefit. In
580 evaluating a waiver request made under this paragraph, the
581 office may consider various factors including, but not limited
582 to, the type of business entity, the volume of business written,
583 the ownership or organizational structure of the entity, or
584 whether the company is in run-off.
585
586 A waiver granted pursuant to this subsection is valid for 2
587 years unless sooner withdrawn due to a change in the
588 circumstances under which the waiver was granted.
589 Section 7. Subsection (4) of section 628.803, Florida
590 Statutes, is renumbered as subsection (5), and a new subsection
591 (4) is added to that section to read:
592 628.803 Sanctions.—
593 (4) If the office determines that any person committed a
594 violation of s. 628.461 or s. 628.801, the violation may serve
595 as an independent basis for disapproving dividends or
596 distributions and for placing the insurer under an order of
597 supervision in accordance with part VI of chapter 624.
598 Section 8. Section 628.805, Florida Statutes, is created to
599 read:
600 628.805 Supervisory colleges.—In order to assess the
601 business strategy, financial position, legal and regulatory
602 position, risk exposure, risk management, and governance
603 processes, and as part of the examination of individual insurers
604 in accordance with ss. 628.801 and 624.316, the office may
605 participate in a supervisory college with other regulators
606 charged with supervision of the insurer or its affiliates,
607 including other state, federal, and international regulatory
608 agencies. In accordance with s. 624.4212 regarding confidential
609 information sharing, the office may enter into agreements that
610 provide the basis for cooperation between the office and the
611 other regulatory agencies and the activities of the supervisory
612 college. This section does not delegate to the supervisory
613 college the office’s authority to regulate or supervise the
614 insurer or its affiliates under its jurisdiction.
615 (1) With respect to participation in a supervisory college,
616 the office may:
617 (a) Initiate the establishment of a supervisory college.
618 (b) Clarify the membership and participation of other
619 supervisors in the supervisory college.
620 (c) Clarify the functions of the supervisory college and
621 the role of other regulators, including the establishment of a
622 group-wide supervisor.
623 (d) Coordinate the ongoing activities of the supervisory
624 college, including planning meetings, supervisory activities,
625 and processes for information sharing.
626 (e) Establish a crisis management plan.
627 (2) With respect to an insurer registered under s. 628.801,
628 and in accordance with this section, the office may participate
629 in a supervisory college for any domestic insurer that is part
630 of an insurance holding company system that has international
631 operations in order to determine the insurer’s compliance with
632 this chapter.
633 (3) Each registered insurer subject to this section is
634 liable for and shall pay reasonable expenses for the office’s
635 participation in a supervisory college, including reasonable
636 travel expenses. A supervisory college may be convened as a
637 temporary or permanent forum for communication and cooperation
638 between the regulators charged with the supervision of the
639 insurer or its affiliates, and the office may impose a regular
640 assessment on the insurer for the payment of these expenses.
641 Section 9. Subsection (3) is added to section 636.045,
642 Florida Statutes, to read:
643 636.045 Minimum surplus requirements.—
644 (3) A prepaid limited health service organization that is
645 authorized in this state and one or more other states,
646 jurisdictions, or countries is subject to ss. 624.4085 and
647 624.40851.
648 Section 10. Subsection (7) is added to section 641.225,
649 Florida Statutes, to read:
650 641.225 Surplus requirements.—
651 (7) A health maintenance organization that is authorized in
652 this state and one or more other states, jurisdictions, or
653 countries is subject to ss. 624.4085 and 624.40851.
654 Section 11. Subsection (3) is added to section 641.255,
655 Florida Statutes, to read:
656 641.255 Acquisition, merger, or consolidation.—
657 (3) A health maintenance organization that is a member of a
658 holding company system is subject to s. 628.461 but not s.
659 628.4615.
660 Section 12. This act shall take effect October 1, 2013, if
661 SB 834 or similar legislation is adopted in the same legislative
662 session or an extension thereof and becomes law.
663
664
665 ================= T I T L E A M E N D M E N T ================
666 And the title is amended as follows:
667 Delete everything before the enacting clause
668 and insert:
669 A bill to be entitled
670 An act relating to insurer solvency; creating s.
671 624.085, F.S.; providing definitions applicable to the
672 Florida Insurance Code; amending s. 624.4085, F.S.;
673 revising a definition; providing additional
674 calculations for determining whether an insurer has a
675 company action level event; revising provisions
676 relating to mandatory control level events; amending
677 s. 624.424, F.S.; requiring an insurer’s annual
678 statement to include an actuarial opinion summary;
679 providing criteria for such summary; providing an
680 exception for life and health insurers; updating
681 provisions; amending s. 625.121, F.S.; protecting
682 material supporting an insurer’s annual actuarial
683 opinion from subpoena, discovery, or admissibility in
684 a civil action; amending s. 628.461, F.S.; revising
685 the amount of outstanding voting securities of a
686 domestic stock insurer or a controlling company that a
687 person is prohibited from acquiring unless certain
688 requirements have been met; deleting a provision
689 authorizing an insurer to file a disclaimer of
690 affiliation and control in lieu of a letter notifying
691 the Office of Insurance Regulation of the Financial
692 Services Commission of the acquisition of the voting
693 securities of a domestic stock company under certain
694 circumstances; requiring the statement notifying the
695 office to include additional information; conforming a
696 provision to changes made by the act; providing that
697 control is presumed to exist under certain conditions;
698 specifying how control may be rebutted and how a
699 controlling interest may be divested; deleting
700 definitions; amending s. 628.801, F.S.; requiring an
701 insurer to file annually by a specified date a
702 registration statement; revising the requirements and
703 standards for the rules establishing the information
704 and statement form for the registration; requiring an
705 insurer to file an annual enterprise risk report;
706 authorizing the office to conduct examinations to
707 determine the financial condition of registrants;
708 providing that failure to file a registration or
709 report is a violation of the section; providing
710 additional grounds, requirements, and conditions with
711 respect to a waiver from the registration
712 requirements; amending s. 628.803, F.S.; providing for
713 sanctions for persons who violate s. 628.461, F.S.,
714 relating to the acquisition of controlling stock;
715 creating s. 628.805, F.S.; authorizing the office to
716 participate in supervisory colleges; authorizing the
717 office to assess fees on insurers for participation;
718 amending ss. 636.045 and 641.225, F.S.; applying
719 certain statutes related to solvency to prepaid
720 limited health service organizations and health
721 maintenance organizations; amending s. 641.255, F.S.;
722 providing for applicability of specified provisions to
723 a health maintenance organization that is a member of
724 a holding company; providing a contingent effective
725 date.
